As per Foreign Trade Policy of India 2015-2020, Service Providers of Notified Services, located in India, shall be rewarded under SEIS, subject to conditions as may be notified. Objective of Service Exports from India Scheme (SEIS) is to encourage and maximize export of notified Services from India.
Para 3.08 of FTP
(a) Service Providers of notified services, located in India, shall be rewarded under SEIS. Only Services rendered in the manner as per Para 9.51(i) and Para 9.51(ii) of this policy shall be eligible. The notified services and rates of rewards are listed in Appendix 3D.
Para 9.51(i) and Para 9.51(ii)
(i) Supply of a ‘service’ from India to any other country;
(Mode 1- Cross Border Trade)
(ii) Supply of a ‘service’ from India to service consumer(s)of any other country in India;
(Mode 2-Consumption Abroad)
(b) Such service provider should have minimum net free foreign exchange earnings of US$15,000 in preceding financial yearto be eligible for Duty Credit Scrip. For Individual Service Providers and sole proprietorship, such minimum net free foreign exchange earnings criteria would be US$10,000 in preceding financial year.
(c) Payment in Indian Rupees for service charges earned on specified services, shall be treated as receipt in deemed foreign exchange as per guidelines of Reserve Bank of India. The list of such services is indicated in Appendix 3E.
(d) Net Foreign exchange earnings for the scheme are defined as under:
Net Foreign Exchange = Gross Earnings of Foreign Exchange minus Total expenses / payment / remittances of Foreign Exchange by the IEC holder, relating to service sector in the Financial year.
(e) If the IEC holder is a manufacturer of goods as well as service provider, then the foreign exchange earnings and Total expenses / payment / remittances shall be taken into account for service sector only.
(f) In order to claim reward under the scheme, Service provider shall have to have an active IEC at the time of rendering such services for which rewards are claimed.
Services Eligible to Claim Benefits under the SEIS:
Service Exports from India Scheme (SEIS) is a reward computed based on the ‘net’ free foreign exchange realized and the percentage of this reward is specified in Appendix 3D of the Foreign Trade Policy 2015-20.
The various services eligible to claim benefits under the SEIS are enumerated in the following paragraphs.
1. Business Services
A. Professional services
Legal services, Accounting, auditing and bookkeeping services, Taxation services, Architectural services, Engineering services, Integrated engineering services, Urban planning and landscape architectural services, Medical and dental services, Veterinary services, Services provided by midwives, nurses, physiotherapists and paramedical personnel.
B. Research and development services
R&D services on natural sciences, R&D services on social sciences and humanities, Interdisciplinary R&D services.
C. Rental/Leasing services without operators
Relating to ships, aircraft, other transport equipment, and other machinery and equipment
D. Other business services eligible
Advertising services, Market research and public opinion polling services Management consulting service, Services related to management consulting, Technical testing and analysis services, Services incidental to agricultural, hunting and forestry, Services incidental to fishing, Services incidental to mining, Services incidental to manufacturing, Services incidental to energy distribution, Placement and supply services of personnel, Investigation and security, Related scientific and technical consulting services, Maintenance and repair of equipment (excluding maritime vessels, aircraft or other transport equipment), Building cleaning services, Photographic services, Packaging services, Printing, publishing and Convention services.
2. Communication Services
Audio visual services: Motion picture and video tape production and distribution service, Motion picture projection service, Radio and television services, Radio and television transmission services, Sound recording
3. Construction and related engineering services
General Construction work for building, General Construction work for Civil Engineering, Installation and assembly work, Building completion and finishing work
4. Educational Services(SEIS benefits not available to Capitation fee)
Primary education services, Secondary education services, Higher education services, Adult education.
5. Environmental Services
Sewage services, Refuse disposal services, Sanitation and similar services
6. Health-related and Social Services.
7. Tourism and Travel-related Services.
A. Hotels and Restaurants (including catering)
B. Travel agencies and tour operator’s services
C. Tourist guides services
8. Recreational, cultural and sporting services(other than audio visual services)
Entertainment services (including theatre, live bands and circus services), News agency services, Libraries, archives, museums and other cultural services, Sporting and other recreational services.
9. Transport services(Operations from India by Indian Flag Carriers only is allowed under Maritime
A. Maritime Transport Services
Passenger transportation (Operations from India by Indian Flag Carriers only is allowed under Maritime transport services), Freight Transportation (Operations from India by Indian Flag Carriers only is allowed under Maritime transport services), Rental of vessels with crew (Operations from India by Indian Flag Carriers only is allowed under Maritime transport services), Maintenance and repair of vessels, Pushing and towing services, Supporting services for maritime transport.
B. Air transport services
Rental of aircraft with crew, Maintenance and repair of aircraft, Airport Operations and ground handling.
C. Road Transport Services
Passenger transportation, Freight transportation, Rental of Commercial vehicles with operator, Maintenance and repair of road transport equipment, supporting services for road transport services.
D. Services Auxiliary to All Modes of Transport
Cargo-handling services, Storage and warehouse services, Freight transport agency services.
Benefit allowed under this scheme is 3% to 5% as per nature of services supplied but the same cannot be used for the payment of GST as per trade notice no. 11/2017 dated 30th June 2017 issued by DGFT.
|Eligible exports||Notified services above $ 15,000|
|Ineligible exports||Foreign exchange received for other purposes like equity, debt, donation, loan repayment, etc. are excluded|
Utilization of Duty Credit Scrips:
The Duty Credit Scrips can be utilized for :
(i) Payment of Basic Customs Duty and Additional Customs Duty specified under sections 3 (1), 3 (3) and 3 (5) of the Customs Tariff Act, 1975 for import of inputs or goods, including capital goods, as per DoR Notification, except items listed in Appendix 3A.
(ii) Payment of Central excise duties on domestic procurement of inputs or goods,
(iv) Payment of Basic Customs Duty and Additional Customs Duty specified under Sections 3 (1), 3 (3) and 3 (5) of the Customs Tariff Act, 1975 and fee as per paragraph 3.18 of this Policy.
Other key aspects to consider are:
> Duty paid by utilization of Duty Credit Scrips eligible for duty drawback
> Duty Credit Scrips are valid for 24 months and revalidation will not be permitted
Effect of GST
Duty credit scrips are classified under HSN 4907 and they are exempted from the whole of GST by an amendment to Notification 2/2017-CT (R)dated 28th June 2018 by notification 35/2017CT (R) dated on 13 October 2017. It is important to note that duty credit scrips are held to be ‘goods’ for the purposes of GST.
Last date of filing of application for Duty Credit Scrips
As per Para 3.15 (b) For SEIS, the last date for filing application shall be 12 months from the end of relevant financial year of claim period.
Ineligible categories under SEIS
As per 3.09 of FTP
Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement. Thus, other sources of foreign exchange earnings such as equity or debt participation, donations, receipts of repayment of loans etc. and any other inflow of foreign exchange, unrelated to rendering of service, would be ineligible.
Further as per Public Notice 45/ 2015-2020 Dated the 5 th December, 2017 Following shall not be taken into account for calculation of entitlement under the SEIS.
a. Foreign Exchange remittances:
I. Related to Financial Services Sector
i. Raising of all types of foreign currency Loans;
ii. Export proceeds realization of clients;
iii. Issuance of Foreign Equity through ADRs / GDRs or other similar instruments;
iv. Issuance of foreign currency Bonds;
v. Sale of securities and other financial instruments;
vi. Other receivables not connected with services rendered by financial Institutions; and
II. Earned through contract/ regular employment abroad (e.g. labour remittances);
b. Payments for services received from EEFC Account;
c. Foreign exchange turnover by Healthcare Institutions like equity participation. donations etc.
d. Foreign exchange turnover by Educational Institutions like equity participation, donations etc.
e. Export turnover relating to services of units operating under EOU/EHTP/STPI/ BTP Schemes or supplies of services made to such units
f. Clubbing of turnover of services rendered by EOU /EHTP / STPI / BTP units with turnover of DTA Service Providers;
g. Foreign Exchange earnings for services provided by Airlines, Shipping lines service providers plying from any foreign country X to any foreign country Y routes not touching India at all.
h. Service providers in Telecom Sector
PPT can be viewed @:
Disclaimer : The views and opinions; thoughts and assumptions; analysis and conclusions expressed in this article are those of the authors and do not necessarily reflect any legal standing.
Author : SN Panigrahi, GST Consultant, Practitioner, Corporate Trainer & Author Can be reached @ [email protected]